Streamline Your Business with a Deposit Invoice Template for Building Services

Deposit invoice template for Building services

i'm jake bruton and today on the build show yet another video from the truck talking about business uh i had a question today online about deposits so i want to talk about that [Music] so the question that i received today was from another contractor someone i know and the question was just hey do you get deposits for stuff yes is the short answer i i hate it when a question's like so open-ended like that what what does four stuff mean uh and um how often are we talking like what are we talking about so let's talk about how deposits work with my company uh the first round of money that you are going to spend with aero building if you're working with my company it's for pre-construction services that's not a deposit you are paying for pre-construction services and you just pay uh the majority of it in advance so that you have open access to my time the the next round of uh money that you'll end up investing with arrow building for a project is a placeholder deposit we call it a placeholder deposit because that deposit represents you getting a spot in our schedule that schedule slides a little bit but when you pay that deposit or before you pay that deposit in general you get a pretty clear picture of when we think we'll be able to start your project obviously if the job before you is a deck and it rains six weeks in a row or your project will slide a little but we try to maintain our schedules with enough wiggle room that that sort of thing doesn't happen the reason that we collect that deposit is because we want you to make a commitment to us in the form of a financial commitment so that we can justify making a commitment to you as in giving you a slot in our schedule that slot is valuable that slot may get us a different job if you're not signed on so we don't just let you go yeah we'll work with you we say okay if you would like to work with us then we need a placeholder deposit so that we can make that commitment to you you are making a commitment to us with the financial investment we're making a commitment to you saving that that uh place in the schedule that was a very difficult thing for me to come up with to begin with i always thought yeah but why would they put ten percent of the job cost into an account with us before the job even starts that doesn't make any sense it seems like they're paying for nothing and then i realized uh after i had a client cancel the day before we were supposed to be there hey we decided to have somebody else do the job for us well now i don't have anything scheduled for the next four weeks because we were planning on doing your bathroom and now i have guys that still have to be paid i have bills that still have to be paid and i have uh truck payments that still have to be made and now i don't have the money that you had committed like i gave you that slot in the schedule and now you don't want us to do the job that's a very challenging thing so by putting in place that placeholder deposit i haven't had that sort of thing happen again uh if you're not serious you're not going to give us any money it is also a non-refundable deposit make sure that all of your deposits the invoice that you give clients for those says non-refundable because otherwise it's not a deposit it's just money that they let you hold on to um i did have some clients give me an um a deposit for a house and then decide to not build the house and say well we'd like our deposit back i held a place in the schedule for you and now i have to scramble for the next five weeks to find work i can't just uh i can't just give you that money back that money back was holding a place in our schedule you caused me financial duress by not having us build that house the deposit makes that a little better but it doesn't resolve it uh so make sure that you say none non-refundable and make sure what your clients understand what non-refundable means the second kind of deposit that you're going to have with us is you're going to have a special order material deposit now if the job is short bathroom kitchen small remodel something like that all of those deposits will probably be lumped in with your placeholder deposit and it'll be one amount you are going to pay in full for any special order item before we place the order for it uh this is something that i also used to not do that i had a conversation with a really great builder friend of mine and he said hey i just wanted to tell you a story to make sure that you were getting deposits he had a very expensive home that uh the clients ordered a hundred thousand dollars worth of travertine tile for the house and they were in the process of building this house travertine is a special order tile it was coming from far away so being smart they lead timed that out and got it into their shop and had it in storage so that it would be ready when the clients were ready to start installing that driver team both of the clients died in a car accident at that point the builder my builder friend is stuck with a hundred thousand dollars or roughly of tile in his warehouse that needs to be returned that he's going to at least pay a 20 restocking fee on which means no fault of his own in fact good planning is is his fault and no fault of the client it's a horrible accident that they they died in a car accident it's no one's fault and the builder is about to be out twenty thousand dollars now to resolve that you can then go to the estate and ask the estate to pay it and if the estate says we're not paying that then you'd have to go through a lawsuit how horrible is it going to be if you have to sue someone's estate and their kids basically uh to get money for something that was done in good faith that was the right thing to do at the time it was the right thing for him to get that tile there early so that they would have it and not cause delays and a horrible horrible event took place it's no one's fault and so i always tell that story to my clients when i talk about this and i tell them that because that's not a like oh well i want to be paid for this in case i decide to walk off the job or i want to be paid for this in case you decide to fire me nothing bad happened in that story or nothing bad that happened in that story was someone's fault uh everyone did everything correctly and someone was still about to be out twenty thousand dollars in an enormous sum of money so i always think to that conversation that i had with that builder when i talk to clients and i always think i have to get a deposit for everything so i just say everything that special order is going to get ordered before we start the job so that it's in sight or on-site or in columbia in our market before we start because we don't want to tear up the bathroom and then realize we have to wait six weeks through the tub we want it here so why not get it coming and have it here before we start for it to get here it has to be paid for for it to be paid for it's coming out of your project it's your pocket so it gets lumped in a lot of times with our placeholder deposit they'll be deposit for uh half of the cabinets for the uh faucets for the drawer pulls all those sorts of things and they'll all get ordered before the job starts and that's because we have the money in the bank to pay for it we can guarantee that that item's paid for uh now moving through the job there may be an instance where someone says okay well i want to go ahead and i've decided that we do want to get that light for the entryway and uh you know we're in framing on that house you're still going to pay for that light fixture before we order that special order light fixture there's no reason why if you're willing to spend that money you're not you shouldn't be willing to go ahead and pay the builder for that for that item now we don't apply that to things like wafer board that we can get in town or studs or even flooring that would be an end stock item at any of the places that we work it's only on items that we wouldn't be able to return or that we would have to pay a restocking fee on so those are the two deposits you're investing in us financially so that we can make a commitment to you by holding you a place in the schedule and if you want us to put our neck out there and order that special order item that's going to be non-returnable that's fine i'm not putting my neck out there you're going to pay for it up front this is good business practice this is not uh being a jerk don't think of it like that think of it as this is how legitimate businesses operate i don't spend money on your job without knowing that the money's there take a deposit seriously i think that it can greatly affect your business it's super important and it helps with one of those you know that one of those biggest problems for our businesses is cash flow when the cash flow isn't there it's pretty darn difficult to stay in business but if you have those big ticket items that are special order paid for in advance that cash flow issue does you know it goes away thanks for watching the build show network this week i'm jake thanks for watching this uh uh series and thanks for all the positive feedback on our business 101 series uh i'm really happy that this is stuff that i'm getting to share because it's all stuff that i wish someone would have sat me down in the first five years of business and said hey you got to take care of this you got to take care of x have you thought about why uh and i that's like my whole goal here is i want everybody to hear these things because i think they're important don't forget uh six days a week there is new content on the build show network matt reisinger's putting out two videos a week and then wade penguin brent hall and steve basic are all putting up videos i'm watching all the videos almost every single week i'm learning a lot from those guys too i'm really happy that they asked me to be involved this is really high level content i'm really pleased with what they're doing as well don't forget to check out the unbuild it podcast that's podcast on building science and building that steve basic and i co-host a couple times a month with uh peter yost until next time thanks for watching the build show [Music]